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3. In the course of the investigation the Income-tax Officer, Madurai, found two cash credits in the books of account produced by the appellant showing a sum of Rs. 1,05,000 under date March 1, 1948, representing a draft from the Imperial Bank of India Ltd., Porbandar, and a sum of Rs. 53,199-12-6 under date March 15, 1948, representing a draft from the Porbandar State Bank through the Central Bank of India Ltd., Bombay, credited to the account of Yamma Bai Ahamed, the maternal grandmother of Kathija Bai Habib, wife of the appellant. The appellant was called upon to explain these entries and he made his statement on January 26, 1949, before the Income-tax Officer who recorded the same. His explanation was that the said two sums represented the sale proceeds of gold, jewellery and sovereigns which belonged to Yamnabai who was a native of Ranavav near Porbandar in Saurashtra. His case was that she was living in Ranavav but had come away to Madurai sometime in 1947, that she decided not to return to Ranavav owing to the communal disturbances which broke out in August, 1947, and empowered the appellant to sell the jewellery, gold and sovereigns situate in her house in Ranavav and bring over the sale proceeds to Madurai and invest the same there, that thereupon he proceeded to Ranavav, took the gold, jewellery and sovereigns from the house to Porbandar and got the same sold through Messrs. Shariff Hassan and Brothers and remitted the sale proceeds through bank drafts to Madurai, Rs. 1,05,000 on March 1st 1948, and Rs. 53,200 on March 15, 1948, and that these amounts were credited in her name as deposits in the books of account of the appellant. In proof thereof the appellant produced before the Income-tax Officer the original invoice relating to the sale of jewels and gold, furnished by Messrs. Shariff Hassan & Bros., Shroff Merchants, Porbandar, through whom the sales were effected along with a copy of their accounts. The letters received from the Imperial Bank of India and the Central Bank of India evidencing the transmission of funds were also produced.

11. We find on the record a reply dated January 9, 1951, addressed by the Income-tax Officer, Ward B, Junagad, to the Additional Income-tax Officer, Madurai, which reported that Yamnabai's father and husband were said to have done very good reported that Yamnabai's father and husband were said to have done very good business in Africa and as she was the only surviving issue of her father it came about that she inherited a good amount by way of gold valuables, bullion and cash, that on that side of the country wealthy Muslims invested their finances in purchase of ornaments and bullion, that four or five persons who had been interviewed by his Inspector had in general terms confirmed the well-to-do condition of both the father and the husband to whom she had inherited on the death of both of them about 25 to 30 years ago, that the sale of gold and sovereigns and ornaments appeared to be quite genuine so far as the transaction between Messrs. Shariff Hassan & Bros., and the appellant was concerned, that this transaction was not a solitary one, but Messrs. Shariff Hassan & Bros., had done similar transactions which were also found in their books, that under his instructions the Inspector had interviewed Harjivan Trikamji, the head munim of Messrs. Shariff Hassan & Bros., who had also confirmed the transaction as having been effected during 1948 and stated that actual delivery of gold and bullion stock took place in his presence, and that his Inspector had also interviewed Messrs. Jusub Aboobacker and Dadamiah who had confirmed their affidavits filed before the Income-tax Officer, Madurai. By his letter dated February 22, 1951, the Additional Income-tax Officer, Madurai, wrote back to say that there were suspicions about the transaction inasmuch as it was likely that the appellant could have earned a large income during the control and had subsequently not brought the same to account, the inference being that he had invested these unaccounted profits in purchase of gold and jewellery and had later sold the same and brought the sale proceeds to Madurai. The question moreover was whether the appellant would have allowed such a large amount to lie idle for 25 to 30 years with Yamnabai and that too in the not very secure precincts of the house at Ranavav. He therefore asked the Income-tax Officer, Junagad, to make detailed enquiries of cloth merchants and others known to the appellant who might give useful information in the matter. Pursuant to this letter from the Additional Income-tax Officer, Madurai, Harjivan Trikamji Mehtaji of Messrs. Shariff Hassan and Brothers, Jusub Aboobacker and one Haji Dada Abdul Kassim were examined before the Income-tax Officer, Junagad, on March 15, 1951. Harjivan Trikamji confirmed that the appellant had gone to his firm to sell ornaments and he remembered that the appellant had said at that time that those ornaments belonged to his mother-in-law, and he had also possessed the power of attorney. He distinctly remembered that such a talk had taken place between the appellant and his proprietor because it was a transaction of a big amount and all these things were clarified with the appellant. When he was asked to say what the ornaments were like, he replied that the ornaments were of old time and were of old model which he knew very well. Jusub Aboobacker stated that he had been asked by Yamnabai to keep watch over her house and household things during her absence from Ranavav as she went to Madurai for a short period, that she thereafter changed her mind about coming back to Ranavav on account of communal troubles and sent the appellant who was the son- in-law of her daughter to dispose of all the furniture and valuables lying in the house, that he was present at the time of the removal of valuables from an "old treasure" which was in the house, that he also witnessed the removal of the ornaments and the sovereigns, that he did ask for the authority which she had given to the appellant for the removal of valuables as while going to Madurai she had particularly asked him to keep a watch as a good amount by way of gold, jewellery and sovereigns was lying in the house and that the ornaments which she had inherited from her father and husband whose only heir she was, were of old type. Haji Dada Abdul Kassim stated that and it was well known in their community that she was a rich lady possessing a good amount of money and valuables. The Income-tax Officer, Junagad, enclosed these statements along with his letter dated March 17, 1951, addressed to the Additional Income-tax Officer, Madurai, wherein he stated that he had taken an opportunity of visiting Ranavav which was 8 miles away from Porbandar, that he had seen the house belonging to her which was a pacca building but of old style and if put in market would not fetch more than Rs. 10,000 to Rs. 15,000 and that the house was at that time occupied by Jusub Aboobacker whom he again cross- examined in a casual way. He further stated that there were few cloth dealers in Ranavav and they were mostly Hindus who did not know her but there was one Mohammadan cloth dealer who knew her and who was also cross-examined by him and his answers were also sent by him along with the letter. He also stated that he had cross-examined the head munim of Messrs. Shariff Hassan & Bros, and tried to get from him something to prove whether the ornaments in question were newly purchased or not but the result was in the negative. He therefore suggested that if the latter wanted his suspicions to be confirmed, the jewellery, gold and sovereigns in which the unaccounted profits were suspected to have been concealed must have been purchased somewhere in Bombay or Madurai and the enquiries in that behalf should be pursued there.

It is no doubt true that he returned to Madurai, on or about March 2, 1948, and the second remittance of Rs. 53,282 was made by Messrs. Shariff Hassan & Bros., on March 8, 1948, through the Porbandar State Bank. They were respectable Shroffs and merchants and there was nothing surprising if after the first remittance of Rs. 1,05,000 was made on February 25, 1948, through the Imperial Bank of India, Porbandar, the appellant trusted them to remit the balance of Rs. 53,282 some time later as they in fact did on March 8, 1948. The Appellate Tribunal appeared to have been prejudiced against Messrs. Shariff Hassan & Bros., because they did not send an immediate reply to the enquiry addressed to them by the Income-tax Officer, Madurai, on December 18, 1948. The explanation rendered by Messrs. Shariff Hassan and Bros., in their letter dated May 24, 1949 that they had misplaced the letter of the Income-tax Officer, Madurai, dated December 14, 1948, and hence could not reply to the same earlier, it was urged, was a reasonable explanation and the Appellate Tribunal was not justified in criticising the firm of Messrs. Shariff Hassan & Bros., in the manner it did stating that they had not even the decency to reply to the query of the Income-tax Officer, Madurai.

(4) The different modes of remitting the monies, viz., of the sum of Rs. 1,05,000 through the Imperial Bank of India and the sum of Rs. 53,282 through the Porbandar State Bank, did not furnish any material for suspicion or surmises. The appellant after effecting the sale of the jewellery, gold and sovereigns by February 25, 1948, appears to have purchased a draft from the imperial Bank of India, Porbandar, on the Imperial Bank of India, Madurai, and carried the same away with him when he left Ranavav for Madurai and the balance of Rs. 53,282 was sent by the firm of Messrs. Shariff Hassan & Bros., by Air Mail from Porbandar State Bank through Central Bank of India Ltd., Bombay, to Central Bank of India, Madurai. Neither the appellant nor Messrs. Shariff Hassan & Bros., nor their partner Kassam Shariff nor their Mehtaji was asked as to why the whole sum was not remitted from Porbandar to Madurai on February 25, 1948, but was remitted in two instalments one of Rs. 1,05,000 on February 25, 1948, and the other of Rs. 53,282 on March 8, 1948. In the absence of any explanation asked for by the income-tax authorities from them in this behalf it would not be legitimate to comment on that circumstance.